Farmington faces budget cuts with levy cap for 2014

After two years without increasing its tax levy, Farmington was looking at an increase in the neighborhood of 3 to 5 percent for 2014 to balance its budget. But that was before the Legislature passed a bill capping city increases at 3 percent.

That means the city will probably be back to cutting its budget, and City Council members say they're not yet sure where to make the cuts.

After years of talks and efforts to stabilize the city's finances, the city started its 2014 budget discussions with draft levy that would mean a 5.87 percent increase. The budget would fund items such as a new firetruck and other fire department needs, set aside $125,000 for long-term capital projects and pay down debt. Now, some of those priorities could be thrown into question.

Farmington City Administrator David McKnight asked the council for direction on where to propose cuts at a budget workshop last week.

Council members said they're not in a position to prioritize cuts until they know exactly how much they need to cut. They are waiting to learn details of the levy limit — for example, whether the city's debt payments would be included in the 3 percent figure. The city also awaits word on how much it will receive from the state's fiscal disparities fund.

McKnight presented the proposed budget to the council and city department heads at last week's workshop, explaining that the general fund expenditures were expected to rise by 5.19 percent, from $10.5 million to about $11 million.

A big chunk of the extra expense would come from the fire department's proposed $312,000 increase, some of which includes a new fire vehicle for $125,000, an increase in equipment for $45,000, training classes increasing by $23,000, building maintenance for $61,000, uniforms for $8,000 and workers compensations included in the budget for the first time at $24,000.

Mayor Todd Larson said maybe the one percent CIP levy "would be history" given the cap on the tax levy. He added that the proposed budget, despite the higher tax levy that is no longer an option, is setting Farmington on the right track.

"When I look at this, I see proper financing. Finally after years, I think we're there," Larson said. "We're finally getting to figure out our needs instead of guessing and hoping and praying that money is going to be there."

McKnight said one goal in his approach to the 2014 budget is "correcting past issues and not passing today's issues to tomorrow's leaders."

Council member Douglas Bonar asked McKnight to draw up budget proposals for scenarios including a 1, 2 and 3 percent levy increase, to give the council options. McKnight will spend the next several weeks meeting with department heads and putting together those scenarios, as well as a 5 and 4 percent proposal for comparison.

"I don't want to see a tax increase at all, but I do want to see a healthy Farmington," Larson said.

"I don't even know where to begin [making cuts]," she said, adding to McKnight: "I don't know how you're going to do it with such limited resources."

McKnight said he has some ideas on where to propose adjustments or cuts. The city will also be meeting with the fire department in July to discuss upcoming expenses for equipment, retirements and clothing.

McKnight said the city is seeing a change in property values, "which is, depending on who you are, good and bad." Residential tax capacities will see an increase for the first time since 2006 as residential values go up, and commercial and industrial properties will see a decrease in their tax contribution.

"If we didn't raise the levy, most residential homestead properties would see a little bit of an increase next year because of how the pie breaks down," McKnight said. "So it's just this pendulum swinging, and it's swinging back the other way now from what you've been used to since 2006."

He emphasized that the property value changes are not across the board.